Technical Analysis AUD/USD Resistance Broken.
* AUD/USD Technical Strategy: Flat
* Prices Break Four-Month Trend Line Resistance, Hint at Further Gains
* Risk/Reward Parameters, Looming Event Risk Discourage Taking Trade
Technical Analysis AUD/USD Resistance Broken the Australian Dollar is poised to continue higher against its US namesake after prices broke above falling trend line resistance capping gains since mid-May. Prices began to recover as expected after the Aussie put in a bullish Morning Star candlestick pattern.
Looking ahead, a daily close above the 61.8% Fibonacci retracement at 0.7236 opens the door for a challenge of the 76.4% level at 0.7313. Alternatively, a turn back below the 50% Fib at 0.7173 – now recast as support – clears the way for a test of the 0.7110-37 area, marked by the aforementioned trend line and the 38.2% retracement.
Risk/reward considerations argue against taking a trade at the moment. The available trading range is narrower than 20-day ATR, suggesting prices are wedged too closely between near-term resistance and support to justify taking up the long or the short side (assuming a stop-loss triggered on a daily closing basis, as or strategy calls for).
Furthermore, the upcoming FOMC policy announcement represents a major inflection point for risk appetite that may trigger outsized volatility and disrupt positioning. With that in mind, we will continue to stand aside.